LIVE FUTURES REPORT 23/04: LME base metals struggle; aluminium down 7.5%

Base metals on the London Metal Exchange ended lower at the close of trading on Monday April 23, with aluminium falling 7.5% after the United States announced it would not impose secondary sanctions against UC Rusal.

The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) will not impose secondary sanctions on non-US persons for engaging in the same activity involving Rusal or its subsidiaries that the General License 14 authorizes, according to a statement on Monday.

“We have seen today the LME [aluminium] price has been staggering, things have fallen considerably and the market is volatile,” a market source said. 
The light metal’s three-month price reached a high of $2,534 per tonne before dropping during the afternoon, despite volumes once again trading above 30,000 lots.

“You still have the alumina story with Albas and Alunorte to keep aluminium alive above $2,000 per tonne,” a trader told Metal Bulletin. 

Similarly, nickel’s three-month price dipped considerably during the afternoon, falling 4% after speculation about US sanctions against Russian nickel producer Nornickel began to ease.

“It appears that some common sense has prevailed in the nickel market. With no sign of imminent fresh US sanctions similar to that on aluminium, the vicious rally toward $16,690 per tonne was baseless and wildly speculative,” Metal Bulletin Andy Farida said.  

“We will let the selling run its course but will be on the lookout for dip-buying opportunities to show themselves near key technical support levels,” he added.

Elsewhere in the complex, base metals finished lower across the board. 

Copper’s three-month price finished below $7,000 per tonne, continuing to float around $6,900-$7,000 per tonne.
The red metal received fresh cancellations across Europe and Asia throughout the morning, but consolidation remains largely in place despite positive market sentiment for the metal. 

Zinc and lead’s three-month prices made marginal drops but similarly remain in consolidation. 

Tin’s three-month price fell 3.2% to just above the $21,000-per-tonne mark. The metal’s cash/three-month spread has moved from a backwardation of $309.80 per tonne to $290 per tonne. 

Aluminium, nickel take hit

  • The three-month copper price fell $49 to $6,943 per tonne. Stocks fell a net 1,550 tonnes to 351,825 tonnes. 
  • Aluminium’s three-month price fell $174 to $2,295 per tonne. Inventories dipped 10,525 tonnes to 1,385,025 tonnes. A fresh cancellation of 4,100 tonnes took place in Rotterdam. 
  • The three-month nickel price dropped $565 to $14,265 per tonne. Stocks were up 18 tonnes at 312,912 tonnes. Fresh cancellations totaling 1,170 tonnes took place in Gwangyang and Johor.
  • Zinc’s three-month price dipped $3.50 to $3,229 per tonne. Inventories dropped 1,825 tonnes to 183,175 tonnes.
  • The three-month lead price was down $45 to $2,320 per tonne. Stocks were down 50 tonnes to 130,950 tonnes.
  • Tin’s three-month price fell $675 to $21,050 per tonne. Inventories increased 60 tonnes to 2,155 tonnes.

Currency moves and data releases 

  • The dollar index was up 0.56 to 90.84.
  • In other commodities, Brent crude oil was up 0.69% to $74.13 per barrel.
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